While this change will take time to work its way through the regulatory system, it could set off a chain reaction resulting in a broader, and riskier, diversification of 401(k) assets.

The aim is to open up the more than 90 million employer-sponsored 401(k) plans to what are known as “alternative assets.” The White House bills this as a way for less wealthy Americans to participate in these burgeoning asset classes. As the stock market shrinks and private equity, real estate, and crypto expand, the White House sees the ability to participate in more areas of Wall Street as a win for Main Street.

Critics see opening up retirement funds to these asset classes as a way to introduce speculative products that savers often don’t quite understand into retirement savings.

While the new rules are pitched as an upside for retirement portfolios, they are not without controversy. Credit unions should be aware of these new rules and potential drawbacks –  not just for members, but for their own fiduciary duties as 401(k) providers.

The Member Impact

For roughly 90 million Americans, 401(k)s are the main retirement plan. Credit unions strive to go beyond banking and to help members reach full financial wellness. Because of that, understanding the risks in these new rules is crucial for credit unions to better educate members to make the best decisions.

These risks include:

• Volatility: While private equity and some cryptocurrencies can see higher returns for investors, that often comes with higher volatility. That can be attractive for younger consumers whose 401(k) plans may not reach maturity for decades. But those closer to retirement could pay dearly. If that member’s portfolio is hit by a “crypto-winter,” as seen in 2022-23, it could prolong their retirement plans. Further, many finance experts are skeptical as to whether a plan centered on private equity can match the performance of a more traditional stock-and-bonds plan.

Annual Growth Rates of Bitcoin and S&P 500
DATA AS OF JULY 2025
SOURCE: CoinDesk and S&P Dow Jones Indices

• Cost: Investing in private equity and crypto funds can bring additional fees and costs to the member than a fund invested in a traditional portfolio. Over time, fees can add up and eat into compounding returns, costing members with 401(k) plans significant money. Further, liquidity issues with private equity funds can complicate 401(k) administration.
• Valuation: Private equity portfolios are not publicly listed, therefore it is more difficult to obtain up-to-the-minute price information prior to investing. Thus, members may not have a clear understanding of what they own and could have a difficult time running the financial calculations on whether to retire.
• Disclosure: Private equity investments and crypto are not disclosed in the same way as equities or publicly traded stocks, meaning there’s less oversight on performance or due diligence. 401(k) funds that are invested in public markets, on the other hand, are required to disclose their financial performance. This way, members can be confident that their investments are performing well and the custodians are taking care of their savings.

The Employee Impact

While these changes are important for members, there are also implications for employees, since many credit unions offer 401(k) plans as an employee benefit.

There are two key things for employers to keep in mind (including credit unions):

• Employers have a fiduciary responsibility, due to their control over plan management and assets. This is designed to ensure plan participants are not harmed by imprudent decisions by the employer.
• While President Trump’s executive order is designed to address these fiduciary obligations, there are still compliance requirements related to ensuring the funds have fair fees, transparent performance, and alignment with market returns.

The post What Credit Unions Need To Know About New 401(k) Rules appeared first on CreditUnions.com.

What Is A Lifestyle Checking Account?

A lifestyle checking account is designed to offer benefits and perks that resonate with your membership base. These accounts can include a wide variety of offerings, like financial wellness tools, protection products, and discounts. Popular offerings include:

• Cell phone protection.
• Telehealth.
• Identity protection.
• Pet insurance discounts.
• Fuel discounts.
• Travel insurance.
• Roadside assistance.
• And more!

Boost Loyalty With Lifestyle-Driven Checking Accounts

Lifestyle-focused checking accounts are intended to fit members at every stage of life, with benefits that are relevant and appealing to everyone — from students to seniors and even business owners. Offering products that deliver real value in daily life can ensure loyalty to your institution for years to come.

Deliver Value In A Digital-First World

One of the most beneficial perks of these checking accounts lies in their flexibility. Let’s face it, your members are busier than ever and the demand for convenience, ease, and accessibility is a given. The ability to access the features and benefits of their premium checking account directly through your mobile app can be a key differentiator that drives engagement and makes you the primary or preferred financial institution for all their banking needs.

Drive Growth With Tailored Solutions

A checking solution tailored specifically to your membership can help create more meaningful connections with your members by demonstrating an awareness of what matters to them. Showing that your institution cares about the financial and personal wellness of its client base can build trust and attract new customers to your institution, keeping you ahead of your competition.

Differentiate In A Crowded Market

Lifestyle checking accounts have become a reflection of the expectations of today’s consumers. Consider the opportunity to combine purpose with innovation and stay true to the credit union mission while evolving to meet the moment.

At SWBC, we know the importance of differentiating and customizing your offerings to meet the goals and needs of your members and your organization. Learn more about the benefits of this amazing checking option and consult with one of our experts!

VISIT SWBC.COM

Ronni Martinez is vice president of product management at SWBC. In her role, Martinez identifies industry partners that bring fresh ideas, concepts, and products to the financial institution space. With a goal to partner with a purpose, Martinez is dedicated to collaborating with industry leaders to develop modern, relevant, and empowering solutions that create value for SWBC clients.

The post Basic Checking Gets A Competitive Upgrade appeared first on CreditUnions.com.

Prizeout is a fintech company that partners with credit unions to help their members maximize their money while generating additional non-interest income for the institutions. To facilitate this, a group of credit unions established Prizeout Partners, a credit union service organization (CUSO), in February 2023. This CUSO grants credit unions access to Prizeout’s CashBack+ ecosystem while its board oversees strategic direction, financial health, and regulatory compliance, ensuring long-term growth and value for its credit union partners.

The Prizeout Partners CUSO board is uniquely made up entirely of female executives from Suncoast Credit Union ($17.8B, Tampa, FL), Stanford Federal Credit Union ($4.3B, Palo Alto, CA), Michigan State University Federal Credit Union ($8.1B, East Lansing, MI), and Interra Credit Union ($1.9B, Goshen, IN). We sat down with these leaders to discuss their unique perspectives, advice for women pursuing fintech leadership, and the initiatives they are championing to expand opportunities for women in the industry.

What unique perspective do you bring as a female leader in fintech, and how does that influence the board’s decisions?

Darlene Johnson, Executive Vice President, Suncoast Credit Union: As a female leader in fintech, I bring a unique perspective that is deeply rooted in empathy, collaboration, inclusion, and a commitment to innovation. My journey in the credit union industry has taught me the importance of understanding and addressing the diverse needs of our members, particularly those from underserved communities. This perspective influences my decisions as a board member by ensuring that we prioritize initiatives that promote financial inclusion and support the wellbeing of all members.

My approach to leadership emphasizes the value of diverse viewpoints and the power of collective problem-solving. By fostering an environment where all voices are heard and respected, I help the board make more informed and balanced decisions. Additionally, my focus on social impact and community engagement ensures that our strategies align with the broader mission of improving the financial health of our members and communities. This holistic and inclusive approach not only strengthens Suncoast but also sets a positive example for the industry, demonstrating the value of diverse leadership in driving meaningful change.”

What advice would you give to women looking to break into leadership roles within fintech and financial services?

Darlene Johnson, Executive Vice President, Suncoast Credit Union: Breaking into leadership roles within fintech and financial services can be challenging, but it’s certainly achievable with the right approach. I believe women should start by immersing themselves in various aspects of the industry, gaining experience in different roles to build a comprehensive understanding of member needs. Networking with other women leaders and seeking mentorship opportunities can open doors to unique opportunities and partnerships, providing guidance and valuable insights from experienced leaders. Continuous learning and development are crucial, as seen in my championing of the Leadership Excellence Achievement Program (LEAP) at Suncoast, which has successfully graduated many team members into various leadership roles.

Embracing innovation and adaptability is essential in the rapidly evolving fintech industry. Women should be open to emerging technologies and innovative solutions, as demonstrated by my approach to partnering with fintech companies such as Prizeout. Additionally, focusing on social impact and community engagement can enhance leadership profiles and attract like-minded individuals to the team.

Building strong relationships and fostering authentic engagement with members and employees are foundational to trusted relationships. By following these strategies, women can effectively navigate the path to leadership roles within fintech and financial services, making a significant impact on the industry and paving the way for future generations.”

Amy Sink, CEO, Interra Credit Union: Get involved. Find a mentor and be present. Do the small things that get you noticed and find ways to get invited to events that help you network.

Fintech and credit unions have historically been male-dominated spaces. How has your role on this CUSO board helped challenge that status quo?

Amy Sink, CEO, Interra Credit Union: I never think about my participation as challenging the status quo. I work on things that are important to me and work with people that have high expectations.

What initiatives or strategies has this CUSO board championed to open more opportunities for women in fintech?

Amy Sink, CEO, Interra Credit Union: We are challenging the “war” on payments. Managing deposit goals and competing with P2P is the new normal and Cashback+ is a tool to help us compete.

How has being part of this CUSO board influenced your own professional growth and vision for the industry?

Amy Sink, CEO, Interra Credit Union: I really enjoy starting something new. In the case of Prizeout, it’s having the opportunity to create a new product and share it within the industry. As a person who has been in the industry for a while, it’s easy for me to share this kind of idea with my friends. Not every CUSO idea works for every credit union but the collaboration in our industry allows us to agree and disagree.”

April Clobes, President & CEO, Michigan State University Federal Credit Union: Serving on the Prizeout CUSO board has provided me with a deeper understanding of how a fintech company evolves — maturing, scaling, and continuously innovating even after an initial product finds success. Our ongoing work and board service has broadened my perspective, allowing me to apply these insights to other boards I serve on, ultimately helping organizations expand and enhance their member experience.

When fintechs succeed, they elevate the entire industry, strengthening its ability to compete and drive innovation. In the early stages, fintechs gain invaluable insights from those who have successfully navigated growth challenges and scaled their businesses. My experience on the board has not only enhanced my effectiveness in my role but has also made me a more knowledgeable and strategic advisor.

What do you see as the biggest challenge facing women in fintech today, and how can organizations like CUSOs help address it?

Amy Sink, CEO, Interra Credit Union: Women have a propensity to take themselves out of the “game” for lots of reasons, but it can hold them back and have them looked over.

What’s one key change you hope to see in fintech leadership over the next five years?

April Clobes, President & CEO, Michigan State University Federal Credit Union: Many fintech leaders I work with are deeply passionate about their products and services, always seeking ways to enhance the member experience. I encourage them to continue fostering collaboration by formalizing and expanding communication channels to support and learn from one another.

The cooperative spirit within the credit union space is what sets this industry apart and has been a driving force behind its growth. While many fintech leaders have begun forging partnerships and identifying synergies, there remains opportunity to collaborate for integrations. By working together and supporting each other, fintechs can strengthen their ecosystem, ultimately driving greater member engagement and delivering even more value.

Strong female voices have the potential to make change. These women in particular are championing mentorship, innovation, and collaboration among one another and their teams to shape the future of their organizations. As the industry evolves, so will their impact, ensuring that more women have a seat and say in the future of financial services.

Prizeout is an advertising and financial technology company that helps put money back into people’s pockets. Through Prizeout’s technology, brand-funded offers are available to all partners, including financial institutions, gaming companies, gig economy startups, and more, giving them access to instant cashback from national and local brands when they shop with digital gift cards. The company was founded in 2019 and is headquartered in New York City. For more information about Prizeout, please visit www.prizeout.com.

The post How 1 CUSO’s Board Is Empowering Women In Fintech appeared first on CreditUnions.com.

Financial institutions face a tough balancing act. They must offer a rewards program appealing enough to attract new cardmembers while ensuring it is profitable. Considering the costs and complex deals involved with reward vendors, compliance efforts, and potential cash reserve, community banks and credit unions may find this challenging.

There are strong consumer trends in today’s competitive market. When considering how to create or optimize a credit card rewards program, consider these three statistics:

1. 43% of consumers identify rewards as a top motive for seeking a new credit card.
2. 35% of consumers apply for a new credit card at least once a year to take advantage of sign-up bonuses.
3. 55% of consumers said the flexibility to redeem whatever they choose is important.

While trust in their financial institution is a contributing factor, according to this report from PYMNTS Intelligence and Elan, what’s clear is consumers are willing to find a credit card at whatever financial institution offers the best rewards to meet their needs.

Consumers expect today’s rewards programs to be easy to use, accessible, and available on all devices. Cardholders want an immediate line-of-sight between their spend and the reward earned, like the option to see mobile alerts on points accumulated from transactions. Elan Credit Card recently launched a new mobile app that fulfills that need by offering the ability to see points year-to-date, by statement, and by transaction.

To optimize engagement, rewards should be fully transparent, and the process of spending and receiving rewards should be both interactive and seamless. Redemption needs to be just as easy, with the option to pay with points or auto-transfer earned cash to an account of the cardholder’s choice.

It takes a skillful balance to run a successful credit card rewards program appealing enough to draw loyal cardmembers while maintaining profitability and compliance.

“The cost of running a credit card program continues to rise across all aspects of the products balance sheet,” says Mitch Pangretic, senior vice president and director of strategic partnerships at Elan Credit Card. “Offering competitive products and rewards while earning a profit has become more difficult, especially during uncertain economic conditions, pending legislation, and further capital requirements for loan assets like credit card.”

The direct operational cost of a rewards product is higher on a per-balance basis than any other loan product. Most of these costs are attributed to cardholder acquisition and administrative expenses.

By providing top-of-wallet products, Elan makes it easier for community banks and credit unions to fortify existing relationships and build loyalty. Explore more insights on rewards programs in this new whitepaper and learn more about the benefits of the agent credit card issuing model and why more than 1,200 financial institutions trust Elan as their partner.

The post The Influence Of Credit Card Rewards On Consumers appeared first on CreditUnions.com.

Aside from the traditional competition from large money center and community banks, credit unions now must contend with the rise of digital banking and challenger fintech companies. These new market entrants offer a range of innovative products and services, often with higher interest rates on savings accounts and competitive loan terms. The heightened competition from these “shiny new toys” has lured away members who are seeking higher returns, greater convenience, and a better digital experience.

Also contributing to deposit erosion is the changing demographics of credit union membership. As younger generations — who are more tech-savvy and open to digital banking solutions — join the workforce, they might be less inclined to choose traditional brick-and-mortar institutions.

Credit unions must adopt a proactive approach that focuses on innovation, member engagement, and member experience. By embracing digital technologies and offering innovative products and services, credit unions can attract and retain younger members while better serving their current members. Investing in personalized member experiences and building strong relationships with members can foster loyalty and encourage deeper relationships. This combined with the trust, safety, and service already provided by credit unions will give members reasons to stay and for new membership to grow.

CUSO Collaboration Gets Results

This begs the age-old question: Build in-house or find a trusted service provider to partner with? Building takes time and resources most credit unions just don’t have. The vast majority of credit unions’ tech and product budgets cannot compete with the large banks in their markets. The power of credit union collaboration through CUSOs can help fuel innovation at scale, allowing credit unions to compete and thrive as they build and implement meaningful engagement tools. How can credit unions make deposit accounts more relevant and offer new and existing members unique and valuable tools?

Enter CashBack+, a digital engagement, rewards and loyalty platform powered by Prizeout — the direct result of CUSO collaboration to solve these issues.

Michigan State University Federal Credit Union ($8.2B, East Lansing, MI) leverages CashBack+ to reward and engage with their members. Earlier this year, MSUFCU deployed Offers, the first of three CashBack+ products. CashBack+ Offers is a digital marketplace where members can take advantage of personalized merchant-funded cashback shopping offers when paying with their MSUFCU accounts. This is a secure marketplace with over 500 offers which lives behind banking walls in both online and mobile banking, delivering instant cashback and puts MSUFCU top of wallet on every transaction.

Cashback and shopping rewards have generally only been available to credit card users…until now. CashBack+ Offers enables debit card and checking account users to earn instant cashback on every purchase they make using their deposit accounts, and there are no limits on how much they can earn throughout the year. MSUFCU members are taking advantage of this benefit.

Members are earning more cashback:

• The top 25% of users are on pace to earn $190.00 per year.
• The average user is on pace to earn $91.00 per year.
• CashBack+ rewards earned average is in the 8% to 10% range, compared to the national average cashback rewards earned percentage of 1% to 2%.

While earning cashback is a win and satisfying for members, MSUFCU is also benefiting from increased digital engagement, capture of member spend, and increased product use:

• Driving Digital Engagement: CashBack+ users are 3.5x more likely to have online banking sessions than those who don’t convert.
• Consistent Engagement: CashBack+ users check for offers 1.7x a week.
• Product use is consistently growing: Purchase volume is growing 15% each month.
• Member Satisfaction: Active users are spending 17% of their eligible spend with CashBack+ each month.
• Member Retention: Two-thirds of users will buy again in a quarter.
• A New Source Of Non-Interest Income: MSUFCU is paid a revenue share that outpaces debit interchange on every member transaction.

“For years, we have been looking for a simple and secure way to reward our members for their loyalty without adding complicated or cumbersome steps to receive their benefit. Many of the current options can be difficult to use, leading the member to lose interest,” says Ami Iceman, chief experience officer. “CashBack+ Offers from Prizeout has quickly proven to be a great tool that our members love using, especially when we know every dollar matters.”

In the first quarter, Prizeout will be releasing CashBack+ Pay (a pay-by-credit-union cashback shopping tool) and CashBack+ Rewards (a spend-based and actions-based rewards platform) to give credit unions even more ways to reward and engage with their members.

“We are very excited to add Pay and Rewards to our member engagement strategy,” Iceman adds. “The full suite of CashBack+ products and services is a true differentiator as MSUFCU works to retain and grow our membership. Benefits such as these reinforce the value we can provide our members as their primary financial institution.”

The Prizeout Partners CUSO was formed in February of 2023 by 20 founding members to build digital products for credit unions, by credit unions. Prizeout now powers the engagement, loyalty, and rewards strategy for more than 30 credit unions. For more information about deepening member relationships with CashBack+, visit prizeout.com.

The post Drive Deeper Relationships Through Digital Engagement And Deposit Account Use appeared first on CreditUnions.com.

Top-Level Takeaways

• Credit unions like Alliant and Affinity are leveraging straightforward, easy-to-use rewards programs that align with members’ needs, leading to deeper engagement and higher member satisfaction.
• By minimizing costs and focusing on digital innovation, credit unions can offer competitive rewards without annual fees, even as they navigate regulatory pressures and a competitive market.

Credit card rewards programs are more popular than ever. According to a recent Ipsos Consumer Tracker survey, nearly three in four Americans have a credit card that offers rewards and two-thirds of those cardholders prefer to use their rewards-earning cards, primarily due to the points they accumulate, the May report found. Furthermore, 35% of cardholders believe they spend more because of the rewards, and 37% say they would reduce their credit card spending if these benefits disappeared.

The effect of rewards programs on spending is clear, but credit unions have some room to blaze their own trail when it comes to achieving — and sustaining — program success.

Easy To Use = Deeper Engagement

With more than 800,000 members and $20 billion in assets, Alliant Credit Union ($20.1B, Chicago, IL) is one of the largest credit unions in the United States. Its flagship product, the Visa Signature Cashback card, offers one of the higher cash-back rates in the industry — up to 2.5% on all purchases. Unlike many of its competitors, Alliant doesn’t require members to navigate complex categories or spending tiers to earn that payback.

“Our mission is to wow our members by offering higher rewards, no annual fees, and lower rates,” says Sumeet Grover, a 25-year financial services veteran who joined the Chicago-based cooperative as its chief digital and marketing officer in May 2021.

By eliminating category management and providing top-tier rewards without annual fees, Alliant makes it easy for members to maximize their cash-back earnings. The credit union’s digital-first model also enables Alliant to keep costs low to sustain generous reward levels.

And for members not interested in rewards, Alliant’s Visa Platinum card provides a 0% introductory APR for the first 12 months on both purchases and balance transfers and a competitive balance transfer fee of just 2%. Factors like choice and ease of use help build a self-reinforcing cycle of deeper engagement.

“As members become acquainted with our competitive rates and user-friendly products, they often open additional accounts and services,” Grover says. “This boosts our profitability and enables us to pass more savings on to our members.”

Alliant’s branchless operations also help the credit union boost profitability.

“By being one of the only fully digital financial institutions in the nation, we have no costly overhead to operate branches, which allows us to save members money,” Grover says. “In 2023, we saved our members $442 million — more than $830 per member — through low loan rates, high savings rates, and lower fees.”

Member-Centric Rewards

The flagship product at Affinity Federal Credit Union ($4.2B, Basking Ridge, NJ) is a Cash Back Visa Signature card that provides up to 5% cashback on purchases from Amazon and bookstores; 2% on gas, groceries, and streaming services; and 1% on all other purchases. This tiered reward structure offers substantial benefits for everyday spending, positioning it as the preferred choice among members, according to the credit union.

Affinity’s strategy is rooted in delivering products that align with members’ needs and financial wellbeing, even if that means less for the credit union’s bottom line. For example, in response to member feedback, Affinity removed all annual fees from its credit card products.

“Even though Affinity might earn less revenue, our members are happier and more engaged and use our cards many times each month,” says Ted Anders, Affinity’s head of payments who brought more than 30 years of banking experience when he joined the credit union team in December 2021. “A highly satisfied member will remain loyal for years to come, and that is what it means to be a credit union.”

The cooperative’s card lineup reflects its commitment to the broad range of individual member needs and preferences throughout their financial journey. These include the Secured card, designed to help members build or repair their credit, as well as the Pure Rewards card, which allows members to earn points redeemable for merchandise, gift cards, and experiences.

“Talk with your current and prospective members and tailor your credit cards to meet those expectations,” Anders advises.

Anders also says it’s important to consider what members need not only today but also throughout their lives. For example, a consumer that needs a $500 secured credit card to build or repair their credit today might buy a home in a few years and need more credit to buy furniture. In that case, a cash-back card might help make their dollar go further.

Also, don’t chase the success of other providers. Know the credit union’s members and serve their needs.

“Never try to replicate a competitor’s credit card for your own members just because it appears to be successful,” the Affinity executive says. “What works for one might not work for everyone — try selling a high-quality meat subscription service to vegetarians.”

Rewards Programs Shape Member Behavior

As the Ipsos survey highlights, rewards programs can strongly influence consumer behavior. Indeed, both Alliant and Affinity have observed significant changes in their members’ spending habits.

For Alliant, straightforward, attractive rewards has led to high member engagement and retention. The credit union recently enhanced its program with the introduction of automatic Tier One rewards for the first 100 days for new Visa Signature Cashback cardholders. The move makes it easier for members to start earning the maximum cashback from day one and has been well received by members.

“We’ve seen a great response from members,” Grover says. “By simplifying the process, we’ve made it easier for them to earn rewards quickly, which enhances their overall experience.”

Anders at Affinity, meanwhile, points to the appeal of the credit union’s enhanced mobile app that allows members to manage their finances from anywhere, offering features such as instant digital card issuance in the event of a lost or stolen card.

“Our approach is about continuously adapting to meet our members’ needs,” Anders says.

Such innovation and ease of use, along with card offerings that address members’ evolving individual needs, has resulted in steady improvement in credit card penetration — more than 25% of members now carry an Affinity credit card.

Strategies And Challenges

Operating as a not-for-profit underlies how credit unions like Alliant and Affinity can sustain cash paybacks on fee-free cards.

“Affinity returns more of the income generated by interchange to our members than other financial institutions,” Anders says. “We don’t have to deliver profits to shareholders and we are, of course, tax exempt.”

He says without those constraints, Affinity has the ability to provide more robust rewards in the same way the credit union invests in its communities through, for example, financial education programs. Anders also says members made it clear that an annual fee, no matter how valuable the card, was not desirable.

“Ultimately, Affinity determined the reward cards we offer were going to be less profitable than non-reward cards or our competition’s cards,” he says. “We’re satisfied delivering products that our members love more than the additional income generated by an annual fee.”

Like any issuers, Alliant and Affinity still face challenges in maintaining their generous reward levels, especially in a competitive and regulated market. For Alliant, the digital model is key to sustaining rewards without charging annual fees. By minimizing overhead and maximizing online engagement, Alliant can continue to offer high cashback rates while keeping costs in check, Grover says.

Affinity’s Anders also points to a complex regulatory landscape whose shifts and changes could impact its rewards programs.

“There will definitely be challenges in maintaining existing reward levels with regulatory pressure to reduce fees,” Anders says. “But Affinity is looking to any number of potential solutions to mitigate lost revenue, including new revenue opportunities not related to credit cards or expense reductions that don’t impact our members.”

Both credit unions are focused on enhancing their product offerings and finding new ways to engage with members. Alliant plans to introduce more features and benefits tailored to its members’ needs, whereas Affinity is developing new products aimed at Millennials and Generation Z with a goal of achieving a 50% credit card penetration rate.

“We’re always striving to make our application and approval processes as easy as possible,” Anders says.

This forward-looking approach ensures both institutions remain competitive while continuing to offer valuable rewards to their members.

The post It’s Time To Rethink Credit Card Rewards appeared first on CreditUnions.com.

Of particular note, a significant drop in consumer spending coupled with a pullback in borrowing led to the single largest decline in credit card balances in history in 2020. An avalanche of new purchases in 2021 then followed, even if balances did not rebound.

All in all, there has been a lot to react to and manage through in an environment heavy in remote work and personal challenges. So, is 2022 the time to relax?

If you are prepared for what this year will bring, yes. If you’re not, things could get even more difficult.

This year and beyond, managing a card program will require addressing specific challenges. Failing to prepare could result in a damaged future for the credit unions card program. Looking forward, program managers need to be thinking about the moving parts that drive card programs and consciously planning how to adapt to the current environment.

The State Of The Economy

First, the overall state of the economy matters. Inflation is the headline topic. In some ways, inflation is a positive for card issuers. Higher prices mean larger transactions, which means more interchange. Inflation might lead some consumers to cut back on purchases, but signs so far are quite the opposite purchase volumes continue to grow after a historically strong 2021.

Inflation also means to expect a series of rate increases by the Fed, which started with a 25-basis-point change on March 16. But rate hikes, too, are a positive for almost all card issuers, at least on first impact. A rising rate environment drives up APRs on all variable rate products, increasing interest revenue.

So, all in all, the economy is driving up the revenue lines of card issuers. Good stuff for us.

Credit Risk

Second, credit card program managers need to think about credit risk. One of the most surprising outcomes of the past two years was that credit losses dropped. For credit unions, losses dropped to near historic levels.

This was totally unexpected. In early 2020, experts were in near agreement that charge-offs would drastically rise, some predicted charge-offs would soar to rates near 10%. Amazingly, charge-offs settled in at 2.8% for credit unions. Then they declined even further to 1.8% in 2021. More good stuff.

Expecting charge-offs to continue to drop, however, would hardly be prudent. Few performance measures, in any business at any time, ever stay at such historically favorable levels for long. A prudent issuer will begin to plan for increasing charge-off rates going forward.

Credit Card Balances

Third, let’s think about balances. Culturally, and within most internal measurement systems, credit unions focus their card programs on balances the most. Are balances up? By how much? How can we get more? Grow balances!

2020 was not good for balances. Overall, credit card balances declined by 11% or $117 billion in 2020. They only rebounded by 7% or $68 billion in 2021. Credit union performance during these periods was decidedly mixed. In 2020, credit union balances declined by 6% which was better than banks. In 2021, they increased only by 4% which was worse than banks.

That last figure is worth staring at for a moment: For the first time since 2004, banks outperformed credit unions on balance growth. This is not good stuff.

Consumer Behavior

Fourth, its instructive to look at how consumer behavior has changed over the years. Consumer use of credit cards has changed in ways that are hard to identify by looking back only one or two years.

A fundamental longer-term change is that large percentages of cardholders now strive to put every purchase possible on their cards for rewards value. This has changed the competitive dynamics in undeniable ways. As recently as 2009, cardholders spent less that $2 per $1 in balances over the course of the year. In 2021 they spent $4.60 per $1 in balances. Said another way: Since 2009, balances have grown by 14% while purchases have grown by almost 180%. This dynamic might be why credit union balance growth lagged the bank segment last year. A credit union-focus on balance-driven value (i.e. low rates) has been out of tune in a market where consumers borrow less but spend very aggressively.

Although overall purchase volume was up approximately 23% in 2021, few credit unions have achieved comparable results.

All of this leads to my suggestions for areas that credit unions should focus on in 2022: Staff and management skills, capturing purchases volumes, and investment in upcoming challenges.

Staff and management skills. Too often when things get distressed (ahem, the past two years), issuers discover staff members have not been properly supported and developed for such moments. Its all too easy to ignore staff development when times are good. But without a firm grounding in performance reporting, an understanding of all the levers that move in a card program, knowledge about the competitive market, and established trust with senior management, it can be difficult to feel in control even in good times. When the environment becomes challenging, the costs are particularly high. Decisions are hard to make or worse, are made badly morale suffers, programs fall behind more capable and agile competitors, teams don’t function well, and long-term performance can be damaged. Develop your organizations skills before the tough times come.

Spend time thinking about capturing purchases volumes. Credit unions have long done relatively well attracting those who use their cards to carry balances. Its fundamental to the credit union culture lower rates and fees will attract those who value such things. There’s nothing wrong with that, and a whole lot that is right. But there are large numbers of consumers who prioritize credit card spending for reward earnings. A reward programs structure (how are rewards earned and at what rate), value (what rewards are worth when redeemed), and breadth (what can cardholders get with their rewards) should be on a continuous review-and-update cycle. Benchmarking to market levels cant be delayed. Potentially new cardholders wont pick you card hoping you’ll get to where they want at some later day.

Invest for more challenging times to come. Revenue will rise with spending and prime-driven APR increases. Cost of funds will most certainly not rise as fast, so margin will expand. Credit losses remain favorable. All of this creates positive upward pressure on the bottom line, and profitability in 2022 will exceed 2021 for most. To simply bank this will lead to a worse tomorrow. Use the good times today to make the investments needed to better weather the tougher times. Too many didn’t prior to 2020-2021, and that is why credit unions were outcompeted by banks last year on both balance and purchase capture.

As is always the case, card programs don’t coast well. They slow down, get less interesting to your members, and, ultimately, decline or offer worse-than-average growth. This is why 75% of all credit unions grow at below-market rates every year. If you aren’t prepared to overcome inertia this year, its unlikely more favorable circumstances will come by later.

The post Changes To The Credit Card Market Are Coming. Are you Ready? appeared first on CreditUnions.com.

Top-Level Takeaways

• Wings Financial offers a 0.50% rate deduction on vehicle loans as a credit card rewards option.
• What began as a pilot program is now a permanent fixture in the enterprise’s rewards program.
• Losing some income while gaining some stickiness is the long-term objective, and members agree, at the rate of one every three days.

Wings Financial Credit Union ($7.3B, Apple Valley, MN) received inspiration from a hometown retail giant to ramp up its rewards game.

The Twin Cities cooperative is offering members the ability to use their points to lower their rate on Wings Financial auto loans by 50 basis points. The credit union launched the program in May as a two-month pilot and decided to continue it because of positive response.

“Target is headquartered here, and we were impressed with the loyalty to their Red Card,” says Mike Sahr, vice president of payment systems at Wings Financial for the past six years. “Target rewards shoppers with a generous sales discount when the Red Card is used. They’re cutting into their own sales margins to generate loyalty. It’s a unique reward that only Target can offer. We brainstormed internally on how we can do something similar and came up with the loan interest buy down option.”

Rewarding Members With A Value Add

Sahr says credit union strategists figure the long-term gains justify cutting into margins, especially when it rewards loyalty for using the cooperative’s products and services. It’s a great way to bring additional value to being a member.

“We want to reward those members who are most engaged in the cooperative,” Sahr says. “If a member is using Wings products and services to earn reward points, we want the reward to be meaningful and valuable. The more value our members see in membership, the more loyal they will be to Wings.”

Forty-two members with auto loans totaling approximately $787,000 had taken advantage of the offer by late August, using 1.1 million reward points to save $9,000 in interest.

“It will never be a high-volume redemption option,” Sahr says. “But we’ve had about one member do the redemption every three days since we launched.”

Raising Engagement By Lowering Interest Rates: An Enterprise Reward

The credit union offers the interest buy down via its staff lenders and its Wings Member Rewards landing page. Wings also offers an annual opportunity to earn points on auto loans. Members can get 10,000 points for every $10,000 they refinance by bringing over a loan from another lender.

“Member Rewards is an enterprise program at Wings Financial,” Sahr says, “so points earned remain with members until redeemed even if they close that card account. As long as they stay a member.”

Members also can choose airline tickets, travel services, merchandise, and digital gift cards through a third party, and Sahr says the credit union is looking at adding some additional redemption options next year.

“The revenue, the interest income we’re forfeiting, is well worth the reward back to the member.”

“Also under consideration is adding other ways to earn points beyond using debit and credit cards. Possibilities include signing up for and using Wings digital services,” Sahr says.

“An investment in rewards is an investment in member engagement,” the payments executive says.

“We feel like the revenue, the interest income we’re forfeiting, is well worth the reward back to the member,”Sahr says. “We don’t have all the results yet for this one program, but we do know the more our members participate in our programs and with the cooperative, the longer they stay with us and stay engaged.

“We’re banking on it.”

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National banks have all but abandoned traditional Christmas Club savings and loan specials, but credit unions across the country are standing behind these time-tested offerings, adding new products to the mix such as pre-approved loan offers, skip-a-payment, credit card deals, and post-holiday debt consolidation.

We’ve had the Holiday Loan for more than 30 years, says Valerie Ives, vice president of digital experience at USC Credit Union ($580.4M, Los Angeles, CA). It’s one of our most popular products. Members start asking for it in the early fall or late summer. Many have taken out the loan every year for a decade or more.

USC Credit Union has offered its Holiday Loan for more than 30 years, and it continues to be one of the California cooperative’s most popular products.

Here’s a dusting of the holiday products offered this year in credit union land.

Holiday Loans

Members at ClassAct Federal Credit Union ($227.1M, Louisville, KY) can take out a holiday loan with an interest rate as low as 5.75% 2% lower than the credit union’s standard personal loan. The loan caps at $3,000, which members can take up to 24 months to repay with no payments for 60 days.

Many members each year take advantage of this holiday promotion, says Kimberly Cyrus, marketing director at ClassAct FCU. This year we decided to sweeten the deal.

ClassAct Federal Credit Union’s holiday loan program offers a cheerful interest rate as low as 5.75%. The loan caps out at $3,000, which members can take up to 24 months to repay.

That sweetener comes in the form of a February drawing that will pay off one member’s holiday loan.

According to Cyrus, the holiday loans contribute approximately $1.5 million every year to the credit union’s $123.5 million loan portfolio. Delinquency has run 2% over the past two years but has been as low as 1% in the past.

The holiday season can be tough financially, whether it be finding cash for food and presents, paying medical bills, fixing a car, or preparing your automobile or home for winter, Cyrus says. We strive to be a resource to the community. The Holiday Loan is one of the many ways we do that.

Further north, CoVantage Credit Union ($1.9B, Antigo, WI) offers a Holiday Bucks loan that members can use for a variety of reasons, including debt consolidation, vacations, home furnishings, and more. The loan offers three tiers of interest rates ranging from 2.99% APR for loans of $20,000 or more to 4.99% APR for $9,999 or less. Members can pay back the loan over 48 to 60 months but must take out the loan by Christmas Eve.

The Holiday Bucks program from CoVantage Credit Union offers tight budgets some feliz flexibility. Members can put the money toward a variety of expenses, including debt consolidation, vacations, home furnishings, and more. Interest rates start at 2.99%.

Pre-Approved Loans

In addition to its Holiday Loan with a 6% APR and no application fee, HOPE Credit Union ($302.7, Jackson, MS) offers pre-approved personal loans of $1,000 for 12-month terms, a 10% APR, and no application fee.

Many people go into debt during the holidays trying to take care of their families, says Sandra Patterson, senior vice president for lending at HOPE. We want to make sure they can stay on the correct financial journey.

A $1,000 pre-approved personal loan that offers 10% APR and no application fee helps HOPE Credit Union members steer clear of expensive credit card debt during the holidays.

In 2018, the credit union pre-approved approximately 3,000 loans and closed 763. And to make the loan more broadly available, it has loosened some pre-approval criteria. For example, an overdraft no longer disqualifies applicants.

We wanted to make sure we were not too harsh on our requirement, Patterson says. Making this loan to our existing membership is low risk. And, it’s a great way to help during this time of year.

Pre-approved loans for $1,000 have been so popular at nearby Navigator Credit Union ($329.5M, Pascagoula, MS), marketing has increased direct mailers during the holidays. In the past, the credit union sent mailers with a loan voucher in time for Black Friday but has backed up the launch to earlier in November to accommodate an earlier shopping season. According to marketing director Cheryl Cooper, approximately 20% of the offer’s recipients return a signed voucher by Dec. 31.

We make it as easy as possible for members, Cooper says. They can deposit the voucher. They can call and give us the unique code to activate it. They can stop by a branch or an ATM and deposit it into their savings account.

Credit Card Rewards

Although personal loans are popular, a 2018 consumer survey indicates that 68% of new holiday debt is charged to credit cards. And that debt doesn’t come cheap 55% of respondents reported paying between 10% and 29% in interest. Credit unions are responding with holiday credit card offers of lower rates, no transfer fees, and special incentives.

Members that hold the Navigator Platinum Rewards Card can take advantage of triple rewards through Dec. 31. The card includes no annual fee, no balance transfer fee, and no cash advance fee. Cardholders also earn unlimited uChoose Rewards, including cash back.

Navigator Credit Union offers triple rewards on its credit card during the holidays. Members can redeem for event tickets, electroics, spa treatments, apparel, travel, and cash any time of the year.

We encourage members to have a card like ours with fewer fees and a lower interest rate, Cooper says.

In addition to a 5.99% APR Holiday Loan, MassMutual Federal Credit Union ($252.0M, Springfield, MA) is offering double rewards through Dec. 31 on its Visa Rewards Credit Card.

Members swipe and save at Mass Muutal Federal Credit Union, which offers double rewards on its credit card through the end of the year.

Our members like both of the credit cards we offer, says Jackie Lopez, marketing manager at MassMutual. We have a low-balance, plain vanilla credit card that offers low interest rates for members who carry balances. Those who pay it off like to take advantage of the rewards points.

Extra Credit Union ($231.9M, Warren, MI) combines loan and card promotions for the holidays with a special credit card APR offer of 4.99% for 12 months on balance transfers and no balance transfer fee. Members can also take out a holiday loan of $500 to $2,000 through Jan. 8.

Naughty or nice, members at Extra Credit Union can take advantage of loan and credit card promotions during the holidays. Members don’t have to pay a balance transfer fee on their credit cards, or they can take out a holiday loan up to $2,000.

The holidays are wonderful, crazy, amazing, and, sometimes, stressful, says Ruthann Varosi, marketing manager at Extra. The holiday loan helps eliminate some of that stress and gives people a little extra jingle in their pockets for holiday expenses.

Skip-A-Payment And Debt Consolidation

Skip-a-payment programs and debt consolidation loans are growing in popularity in the holiday special arsenal. Skip-a-payments are typically limited to auto or personal loans, but that extra money can still be beneficial for members during the holidays.

Last year, White Eagle Credit Union ($108.4M, Augusta, KS) helped members access $22,425 through skipped payments.

This year we are surpassing this number with double in Skip-a-Pay, and our number of Holiday Loans is up too, says Debi Devor, marketing director at White Eagle CU.

Skip-a-payment programs and debt consolidation loans are growing in popularity for holiday promotions at credit unions. Whate Eagle Credit Union has helped members access more than $20,000 through skipped payments.

What about the debt hangover that comes after the holidays? Advantis Credit Union ($1.5B, Clackamas, OR) prefers to forgo the holiday specials in favor of a 1% APR discount on personal loans beginning in January.

We will likely do about $9 million in unsecured loans in the first quarter, says Kyleigh Gill, communications and community engagement manager at Advantis. Most of which are debt consolidation loans to pay off credit card debt.

The post Tinsel Traditions: Holiday Loan And Savings Accounts Are Alive And Well At Credit Unions appeared first on CreditUnions.com.

Top-Level Takeaways

• Everence Federal Credit Union places a premium on stewardship and sustainability.
• Those values are baked into a green auto loan, a socially conscious investment portfolio, and credit card rewards options.

Everence Federal Credit Union ($182.8M, Lancaster, PA) serves individuals who belong to denominations that have roots or relationships with the Anabaptist community. It’s a faith-based provider of financial services that, according to its website, is a community that’s committed to spiritual and financial growth, stewardship and sustainability.

“If you are a person who embraces the idea that we should take care of the things we’ve been entrusted with whether time, talent, health, or relationships, you can join the credit union,” says credit union CEO Kent Hartzler.

The credit union places a premium on stewardship and sustainability and puts those principles into action when it designs products and services.

Green Loans

Auto loans at Everence make up one-tenth of its loan portfolio. That’s low when compared to an industry in which more than one-third of the portfolio is dedicated to auto loans. But Everence’s portfolio might start to more closely resemble the wider industry’s thanks to a discounted rate program for green cars that’s gaining newfound attention.

For more than a decade, Everence has offered a discount of 50 basis points to borrowers who buy a hybrid, electric, or fuel-efficient vehicle.

“We’ve had it for years,” Hartzler says. “It was always just a value-add.”

That’s changing now, along with American views on electric cars. According to a study by AAA, 20% of Americans say they plan to make their next vehicle purchase an electric one. And the options for battery-powered and electric vehicles will grow as global automakers pour $90 billion into the market.

Tesla, the dominant player in the market, has three models that totaled more than 100,000 vehicle sales each in 2017. Hartzler says Everence takes hundreds of auto loan applications per month from members looking to finance a Tesla using the green auto discount.

“Making a purchase like this is a statement,” the CEO says. “Electric cars, environmental stewardship, is important.”

Socially Conscious Investments

Health savings accounts comprise approximately 9.6% of Everence’s total deposit portfolio, the fifth-highest percentage among all credit unions in first quarter 2018. Why so popular?

The credit union pairs the transactional element of a traditional HSA with the option to invest funds into a suite of socially responsible mutual funds held and managed by the Everence Trust Company, with which the credit union has a custodial relationship.

“There are some offerings like this out there, but you’d have to find a big institution or one specialized in this sort of thing,” Hartzler says.

According to Hartzler, Everence pays 25 basis points on its standard HSA deposit accounts between $3,000-$25,000 and 35 basis points on deposits greater than $25,000, although he anticipates rates will rise before the summer ends. The mutual funds option offers depositors a potentially greater return (click here to view performance data).

Members pay $3 per month for the option to invest in the mutual funds. There is no cost to transfer funds, and there are no transactional limits. Hartzler finds HSAs to be a particularly sticky deposit product.

“Americans need to save more money,” he says. “With this, they can start to see the compounding affects.”

Swipe And Share Credit Rewards

In April 2017, Everence launched its MyNeighbor credit card that gives cardholders the option to donate to select charitable organizations.

Each time a member uses the credit card, Everence donates 1.5% of the transaction amount to one of 9,000 eligible 501(c)(3) organizations selected by the member. In the first few months of 2018 alone, members donated more than $200,000 to 265 charitable organizations.

Additionally, the credit union dedicates 10% of the income generated from its VISA credit card program purchases to support for the church and mission groups, it caps interest rates on credit cards and loans at 6% for those whose missions or other voluntary service affects their ability to meet financial obligations, and it runs the Everence Sharing Fund, which awarded nearly $900,000 in grants to churches and communities in need in 2017.

These are just three examples of the way Everence lives out the seventh cooperative principle: Concern for community. And Everence is just one example of a credit union that sets forth every day to make a difference in the lives of its members and in its communities marrying principles with practice.

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